Hargreaves Lansdown is regulated by the Financial Conduct Authority (FCA) and is bound by their rules and regulations in the conduct of our investment business. Hargreaves Lansdown Asset Management Limited is authorised by the FCA to hold client money and client assets. Hargreaves Lansdown Fund Managers Limited is authorised by the FCA to manage authorised investment funds (AIFs). You can telephone the FCA Consumer Help Line on 0800 111 6768 (8am-6pm Monday to Friday and 9am-1pm Saturday), to check our registration or ask other queries. Alternatively, you may write to them at the FCA Consumer Help Line, 25 The North Colonnade, Canary Wharf, London, E14 5HS or you can visit www.fca.org.uk
The FCA requires firms to publish certain information to enable the market to assess a firm's risks, capital and risk management procedures - known as Pillar 3 disclosure.
We make regular submissions of our solvency to the FCA, together with annual audited financial statements, annual audited returns of information and a report from the auditors assessing our compliance with the FCA client money rules. See our annual reports and accounts. These demonstrate that we take a very conservative approach to accounting - no borrowings and we hold considerably more cash than the regulations require.
The majority of our income is generated from management fees. It is a secure source of income as it is spread across a large number of clients and new business takes a long time to translate into profits, so unlike many firms we are not dependent on short-term new business to cover our costs.
All client money is held by us on trust and is segregated from our own funds in accordance with the FCA’s client money rules and guidance so that any creditors of Hargreaves Lansdown would have no legal right to it and we cannot use any of this money to cover Hargreaves Lansdown's obligations.
Our Treasury Committee is responsible for overseeing the management of client money balances within the FCA’s regulatory framework, including our selection, appointment and ongoing monitoring of third party institutions used to hold client money. The Committee meets at least quarterly with detailed monthly reporting enabling clear and effective oversight of all facets of cash management activities including liquidity, counterparty exposure and performance. The security of the institutions that we use to hold client money is paramount; we monitor their performance and security on a daily basis to ensure that we are able to anticipate and can react to both changes in general economic conditions and any changes that are specific to individual institutions.
Our policy is to only use institutions with a UK banking licence which are covered by the Financial Services Compensation Scheme (FSCS). The FSCS is backed by government and protects clients’ deposits up to £85,000 in the unlikely event that a bank, building society or credit union defaults. A client’s individual protection will depend on their aggregate balances held by that institution; further information is available on the FSCS website.
Client money held within the Vantage, PMS and SIPP Services is deposited across a Treasury Committee approved panel of institutions with a UK banking licence, excluding the HL Vantage Cash ISA which is held solely with Lloyds Bank Plc. Client money in the Vantage SIPP and PMS SIPP is held in separate SIPP client money bank accounts which are segregated from other client money held by us.
As at 31 December 2016, client money is primarily held with the UK clearing banks. The full panel of approved institutions with a UK banking licence, actively holding client money as at 31 December 2016 comprises: Abbey National Treasury Services Plc, Bank of Scotland Plc, Barclays Bank Plc, Goldman Sachs International Bank Plc, HSBC Bank Plc, Investec Bank Plc, Lloyds Bank Plc, Santander UK Plc and the UK regulated branches of Qatar National Bank SAQ, Emirates NBD PJSC and Bank of Montreal.
Stock you hold with us is held in the name of or to the order of Hargreaves Lansdown Nominees Limited, or by an approved third party custodian. Hargreaves Lansdown Nominees Limited is a non-trading company so it cannot run up liabilities of its own and Hargreaves Lansdown accepts full liability for any default by our nominee company. We maintain detailed records of all your investments and assets for which you will at all times remain the beneficial owner. We do not lend stock held in the Vantage or PMS Services.
Our senior management and CASS Committee are responsible for periodic reviews of the nominees with which stock is deposited.
Investors are likely to be covered by the provisions of the Financial Services Compensation Scheme (FSCS), if Hargreaves Lansdown ceases trading. It can award up to £50,000 in compensation to any one investor where they decide that an investment business is in default and is unable to satisfy any claims against it. In addition, if one of the banks which we use for depositing cash balances is declared in default, each individual is entitled to 100% of the first £85,000 in total in compensation for losses across all their deposits with that institution. Full details of the FSCS detailing the restrictions and financial limits that apply are available on request from the FSCS. You can contact them on 020 7741 4100 or 0800 678 1100 or at www.fscs.org.uk. You can also write to them at FSCS, 10th Floor, Beaufort House, 15 St Botolph Street, London EC3A 7QU.
All Hargreaves Lansdown Group companies are registered in England and Wales and consequently are governed by the Companies Act, which includes a requirement to have the financial accounts audited each year by independent accountants, we currently use the international firm PwC, which is one of the big four chartered accountants in the world. They also do our regulatory audit.
Hargreaves Lansdown Asset Management Limited is also registered with HM Revenue & Customs to enable us to act as an ISA and SIPP manager. Accordingly, our procedures for operating ISA and SIPP Plans are also independently assessed by HM Revenue and Customs.
Unit trusts and OEICs use a trustee or depositary to actually hold the title to the underlying stocks they hold in their funds. This means that if the fund manager gets into financial difficulty your assets are protected from their creditors. The time that the FSCS does not protect you is if one of the underlying stocks within a fund manager's portfolio goes bust.
We want to ensure that everybody who invests with Hargreaves Lansdown is well informed as to the security of the investments they have made and the various protections that are available to them. Accordingly, please feel free to contact us at any time if you would like to discuss this issue in greater detail.
Hargreaves Lansdown Group comprises the following regulated companies: Hargreaves Lansdown Asset Management Ltd, Hargreaves Lansdown Advisory Services Ltd and Hargreaves Lansdown Fund Managers Ltd. 01/2017.